Correlation Between Summit Materials and Chemours
Can any of the company-specific risk be diversified away by investing in both Summit Materials and Chemours at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Summit Materials and Chemours into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and Chemours Co, you can compare the effects of market volatilities on Summit Materials and Chemours and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Summit Materials with a short position of Chemours. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Chemours.
Diversification Opportunities for Summit Materials and Chemours
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Summit and Chemours is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Chemours Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemours and Summit Materials is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Summit Materials are associated (or correlated) with Chemours. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemours has no effect on the direction of Summit Materials i.e., Summit Materials and Chemours go up and down completely randomly.
Pair Corralation between Summit Materials and Chemours
Considering the 90-day investment horizon Summit Materials is expected to generate 0.68 times more return on investment than Chemours. However, Summit Materials is 1.48 times less risky than Chemours. It trades about 0.19 of its potential returns per unit of risk. Chemours Co is currently generating about 0.09 per unit of risk. If you would invest 3,913 in Summit Materials on August 28, 2024 and sell it today you would earn a total of 1,162 from holding Summit Materials or generate 29.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Materials vs. Chemours Co
Performance |
| Timeline |
| Summit Materials |
| Chemours |
Summit Materials and Chemours Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Chemours
The main advantage of trading using opposite Summit Materials and Chemours positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, Chemours can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Chemours will offset losses from the drop in Chemours' long position.| Summit Materials vs. Holcim | Summit Materials vs. Lafargeholcim Ltd ADR | Summit Materials vs. The Monarch Cement |
| Chemours vs. Olin Corporation | Chemours vs. Cabot | Chemours vs. Kronos Worldwide | Chemours vs. LyondellBasell Industries NV |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stocks Directory module to find actively traded stocks across global markets.
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